Early Warning for 07 March 2019

Good morning. Here’s your Early Warning for Thursday, 07 March 2019.

 

Early Warning: Last year, I wrote that China’s claim to six-plus percent GDP growth was likely untrue and real GDP growth was probably only half of that. Brookings recently published a paper that shows China’s GDP numbers were inflated by two points between 2008 and 2016, and that more recent years are likely inflated, as well. [source] (Analyst Comment: China has very real issues with debt that will likely increase going into this global slowdown. At the most recent National People’s Congress, Chinese Communist Party leaders decided to cut taxes and print money in response to ongoing financial and economic woes, but that hasn’t dented the steep rise in corporate bond defaults. China has trillions in off-the-books debt and the shadow banking system is posing a 2008-esque risk. Chinese Premier recently said, “We must be fully prepared for a tough struggle. The difficulties we face must not be underestimated, our confidence must not be weakened, and the energy we bring to our work must not be allowed to wane.” China could very well have a serious financial crisis within the next couple of years, which could affect global finance. Still, once China solves or hurtles its corporate debt problems, the Chinese Communist Party expects to hold enough economic power by 2035 to overthrow the U.S. as the world’s global economic superpower. Waning U.S. power and influence is likely to have a negative effect on the dollar and therefore U.S. living standards and the domestic economy.)

 


 

Government Today

 

The President is scheduled to meet with Treasury Secretary Mnuchin, receive his intelligence briefing, have lunch with Secretary Pompeo, meet with officials from the Czech Republic, then meet with the Acting Secretary of Defense.

Secretary Pompeo is scheduled to meet with President Trump and officials from the Czech Republic.

Representative for Venezuela Elliot Abrams is scheduled to testify before a Senate Foreign Relations subcommittee. I expect to hear an update on the Trump administration’s outlook for Venezuela.

Acting Defense Secretary Shanahan has no publicly scheduled events.


 

Congress

Significant House Activity:

  • Hearing on U.S. European Command (Committee on Appropriations Subcommittee on Defense)

Significant Senate Activity:

  • Hearing to examine private sector data breaches (Homeland Security and Governmental Affairs)
  • Hearings to examine U.S.-Venezuela relations and the path to democratic transition (Foreign Relations)
  • Hearings to examine China, focusing on challenges for U.S. commerce (Commerce, Science, and Transportation)

* Only events pertinent to national security are listed. Significant reporting will appear in this week’s Strategic and National Intelligence reports.


 

Strategic/Defense

These are the last publicly reported locations of deployed carrier groups. Those not listed were last reported in port.

The John Stennis (CVN-74) was last reported as in the Strait of Singapore.

The Ronald Reagan (CVN-76) is forward deployed to Yokosuka, Japan.


 

Far Left Daily

“Getting to family members [in the Trump investigations] I think is dangerous. Only because it gets real personal, real fast. And it risks backfiring. Maybe at some point we have to call them in, but I’d rather let prosecutors look at that.” – Rep. Gerry Connolly (D-VA)

“[Biden’s] nucleus of advisers has begun offering campaign positions to seasoned Democratic strategists. They are eyeing a headquarters in Delaware or nearby Philadelphia and a launch date in the beginning of April. Mr. Biden’s family is on board — his wife, Jill, enthusiastically so.” – Jonathan Martin and Alex Burns writing at the NYT


 

Economy/Finance

Yesterday, the Federal Reserve published its Beige Book. Here’s an overview: “Economic activity continued to expand in late January and February, with ten Districts reporting slight-to-moderate growth, and Philadelphia and St. Louis reporting flat economic conditions. About half of the Districts noted that the government shutdown had led to slower economic activity in some sectors including retail, auto sales, tourism, real estate, restaurants, manufacturing, and staffing services.” Flat or slight-to-moderate growth would portend a halt in further interest rate hikes, but if inflation rises, the Fed could hike rates again, which would slow the economy further.


 

What I’m Looking at this Morning

Army to undergo major force restructuring

NATO commanders wants more military power to counter Russia

U.S. strategic bomber flies over contested islands in South China Sea


 

Notable Quotable

“Democrats just blocked @FoxNews from holding a debate. Good, then I think I’ll do the same thing with the Fake News Networks and the Radical Left Democrats in the General Election debates!” – President Trump last night, via Twitter [source]

Samuel Culper is a former military intelligence NCO and contract Intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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